the problem with rates ????

[Dynamite 1]

while the subject of rates is a prevalent topic i thought i would stir some thought and opinions from others. what does everyone truly think the problem is ? first and foremost i dont want this to run the typical course of cheap freight. more so, why are the rates cheap and what has caused them to not keep up ? lets not go the typical route of { there is always someone willing to do it for less either }. lets look at what has changed from ten years ago. some remember when most freight was called in by the customer not a broker. customers had preferred carriers or a list that they went through. i know carriers still have their own customers but is it as prevalent as in the past. what can carriers do to help bring rates up ? what influence has gps net and the alliance had on rates do to the bidding process. just alot of questions for you all to ponder over and respond to.

lets face it the old just say no to cheap freight has been ground in the dirt because as is always stated { what is cheap to you is not cheap to all }. drivers in general are not alike so there is no agreeable point that we could get all of us to act on. therefore no way the old driver shutdown or dont haul cheap freight is going to cure the problem. the answer will have to come from somewhere else unless we have a moment of clarity and the latter happens, but it is highly unlikely. so please dont go to the two no no points and center in more on some other solutions. look forward to the responses from this one. i also hope you all find this as intriguing a topic as i do.

 

[Tennesseahawk]

Two reasons... supply and demand.

 

[OntarioVanMan]

way back, when we did not have any of these load boards..NLM, Alliance and 3PLs and so forth....and the throw in the supply and demand equation....an over supply of trucks and bam....
the market is saturated....we need to get rid of some trucks or get more freight.. one or the other...

To add..we've also added to the supply problem in a small way...

many more elect not to go into Canada causing a real log jam in border towns...we are letting Canadian companies come across and take the loads across....

 

[Dynamite 1]

those are a couple of replies i had forgotten about. with those added to the no no side is there still a fix possible. a way to get better rates keeping the amount of trucks we currently have ans taking supply and demand into consideration.

 

[OntarioVanMan]

those are a couple of replies i had forgotten about. with those added to the no no side is there still a fix possible. a way to get better rates keeping the amount of trucks we currently have ans taking supply and demand into consideration.

Also I think the new shipper is more computer literate and aware ...they are working smarter as well...

I don't think it is possible NOT to reduce trucks and get higher rates the way things are now...

In the old days a shipper behind in shipments would schedule say a CV every 4 hours for 2 skids...with the advent of the sprinter he can now do 3 skids every 6 hours and eliminate 1 load...

 

[purgoose10]

way back, when we did not have any of these load boards..NLM, Alliance and 3PLs and so forth....and the throw in the supply and demand equation....an over supply of trucks and bam....
the market is saturated....we need to get rid of some trucks or get more freight.. one or the other...

To add..we've also added to the supply problem in a small way...

many more elect not to go into Canada causing a real log jam in border towns...we are letting Canadian companies come across and take the loads across....

The big experts say Truck shortage in 2011. Hope their right.

 

[moose]

What you are asking is impossible to answer without noting the 2 no no questions ,as they are the base to any answer regarding cheap rates .
here is a nice example from only this week.
right here on EO a respectful member stated this week that he will go broke hauling freight at Vans rate . i was laughing my melons off ,cause as i was reading those lines ,i was on the phone with an expediter telling me how happy he was ,making twice the expected income hauling a $ a mile freight in his St. truck .
another point i would like to make ,is that 'shout downs' and boycuts are actually working very well ,and all the times .
a good example is what we see this week in So.Cal.
after weeks of extremely cheap rates ,truckers are actually refusing to go there ,hopefully in the short run it will lead to rates increases .
regardless of how many are dipping into the loads pay,it will always ends up being a supply of available trucks Vs the demand for freight to be moved .

what drivers can do about this ?
2 things .
2: join OOIDA ,and demand them to continue the fight to regulate the brokerage industry .
this is one field in which OOIDA had success in the past ,and more needs to be done .
as you mention in your opening post, the float of brokerage was not around 10 years ago. we simply made it too EZ for everyone with a cellphone to become a broker, without any liability.
2: understand YOUR cost of moving the truck ,and donot pay your costumers to move their freight.

what carriers can do ?
simply : shrink the orientations class .
it used to be that carriers will pay well for exceptional service ,mainly coverage, but with the orientation class spilling newbies in an ever increasing numbers ,they simply float the markets with sitting trucks.
we are our own enemies.
one more thing ,is that Expedite will always have a revolving door. it is being effected by national employments ,and the ever increasing trucking regulation .as long as the Gov. will continue to over regulate the trucking industry ,more experienced truckers will vent into expedite seeking a compliance shelter.

 

[OntarioVanMan]

The big experts say Truck shortage in 2011. Hope their right.

they've been saying something along that line for years...truck, driver shortage..it has yet to materialize...

with the improvements in rail intermodel travel the last few years they are doing it even quicker now...hence reducing truck need...

 

[moose]

The big experts say Truck shortage in 2011. Hope their right.

It's a political bubble .
untouched with reality.

 

[moose]

...

many more elect not to go into Canada causing a real log jam in border towns...we are letting Canadian companies come across and take the loads across....

Yh'a speed limiters was all about safety.
yh'a
right...

 

[OntarioVanMan]

Yh'a speed limiters was all about safety.
yh'a
right...

You are referring to straights...but many, many vans don't go either...that was my thinking...

 

[Dynamite 1]

yes they can be answered without dipping into the no no pile. you just did it with your comments on the brokers and the orientation classes. thats what i am talking about, other ways than the old go to answers. good job !!!!! keep them coming.

 

[highway star]

No matter how you frame the question, it's competition. Internet bidding has increased the downward pressure on rates.

 

[greg334]

All you guys seriously just don't get it, I mean look around and see what has happened ...

A return of the free market from the regulation dark ages
​

You seriously want to change this?

I mean if there is some changes, it may negativity impact the entire industry. But then we have chicken littles running around screaming that the sky is falling because of CSA 2010 and Mexican trucks.

How about we just simply return to the ICC and the 1965 policies?

You know many of you don't get the idea that the free market works and government regulations don't. Many complain about the government being intrusive now with things like EOBRs and such but can you imagine what life would be like if they got their way?

Regulating brokers?

Seriously the OOIDA pushing for that?

Not! They need to actually focus on other areas, like say medical intrusion of the FMCSA or other important issues.

So after that rant, here is an idea ...

I think regulating the carriers would be the best and first step.

Get rid of all the mom/pop operations and the individual authorities people have - got to have 10 trucks in the fleet first. Force them to take a specific type of freight for specific industries. If they want to be an expediting company, they will have to service only one or two industries and limit the amount of trucks they have in the fleet to say 25 with no flat rate to the contractor - only percentage rates. The alliance, the partnerships and the other "helpful" things that allow a dispersion of freight through a number of channels for the servicing of customers would be eliminated and then we will see the drop in competition and a sharp rise in rates. More waiting but it will be worth it in the long run because you will get $3 a mile.

By the way this is all about competition and luck which works, it is the free market.

 

[Dynamite 1]

No matter how you frame the question, it's competition. Internet bidding has increased the downward pressure on rates.

with that being said, how can carriers react to the pressure bidding is putting on rates?

 

[highway star]

I dunno... Collusion?

 

[Dynamite 1]

well, from a legal standpoint we have to stay away from terms of collective bargaining or price fixing. but how about they take a quote from the driver no no list.

 

[Turtle]

The brokers and the size of the orientation classes are steeped in the no-no pile, tho. Both are directly related to "someone will do it cheaper" because as Hawk noted, it's supply and demand, and everything in or out of the no-no pile is directly related to supply and demand.

What has happened since 10 years ago is a dramatic increase in supply (more trucks and vans) over the demand. To make matters worse, over those ten years more and more manufacturing has been relocated overseas and down to Mexico, causing more and more shipments to be truckload and intermodal rather than the smaller, more time-critical expedite loads, further reducing the demand for expedited shipments. On top of all that, the economy has gone into the tank in recent years, reducing the amount of manufactured items, both here and abroad, that would be expedited in the first place.

Another factor is the ubiquitous use of computers in the brokering and bidding process of the line hauls. It used to be you had a very limited time to get a load covered, to find a carrier who could haul the load. A couple of phone calls were made, time is of the essence, and the first one who could take it, regardless of the price, is who got the load. Now, the same load gets put on bid boards or mass e-mails to preferred carriers, and within minutes the shippers are able to pick and choose the cheapest and/or most cost effective carrier.

It all comes down to supply and demand.

Those who beat the "no cheap freight!" drum are trying to hold back the tide with a broom. They remind me of those who tell everyone to "buy gold!". People who want others to buy gold have already bought gold, and want others to buy gold because it will drive the price of gold higher, so they can sell it and make a profit. People who tell others not to haul cheap freight are hoping that enough people will refuse cheap freight so that the rates will be forced upward. These are the people who stand on a beach with a broom.

 

[Dynamite 1]

you are rite about supply and demand but are more precise in your comment about internet bidding. s&d definitely affects the amount of freight available but does it have to affect the price ? who is accepting the price initially and do they not play a role in the pricing

 

[Moot]

Two reasons... supply and demand.

Allow me to add a third reason: 3PL's. One more hand (in some cases 2 or 3 more hands) taking a slice from the same size pie.